2015 Fourth Quarter Earnings. January 28, 2016

Transcription

1 2015 Fourth Quarter Earnings January 28, 2016

2 Safe Harbor Statement Forward-Looking Statements Information in this presentation contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forwardlooking. These statements are often, but not always, made through the use of words or phrases such as anticipate, believes, can, could, may, predicts, potential, should, will, estimate, plans, projects, continuing, ongoing, expects, intends and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several factors more fully described under the caption Risk Factors in the annual report on Form 10-K and other periodic reports filed by us with the Securities and Exchange Commission. Any or all of our forward-looking statements in this presentation may turn out to be inaccurate. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forwardlooking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward looking statements including, but not limited to: (1) changes in general economic and financial market conditions; (2) changes in the regulatory environment; (3) economic conditions generally and in the financial services industry; (4) changes in the economy affecting real estate values; (5) our ability to achieve loan and deposit growth; (6) the completion of future acquisitions or business combinations and our ability to integrate any acquired businesses into our business model; (7) projected population and income growth in our targeted market areas; (8) competitive pressures in our markets and industry; (9) our ability to attract and retain key personnel; (10) changes in accounting policies or judgments; and (11) volatility and direction of market interest rates and a weakening of the economy which could materially impact credit quality trends and the ability to generate loans. All forward-looking statements are necessarily only estimates of future results and actual results may differ materially from expectations. You are, therefore, cautioned not to place undue reliance on such statements which should be read in conjunction with the other cautionary statements that are included elsewhere in this presentation. Further, any forward-looking statement speaks only as of the date on which it is made and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. 2

3 Creating Regional Bank Franchise in SE Growth Markets * Capital Bank CommunityOne* * Subject to regulatory and shareholder approval. 3

4 Commitment to Profitability and Returns Achieved Core ROA Goal of 1.00% Progress Toward Double-Digit Core ROTCE Goal 1.2% 10% 1.0% 1.00% 9% 8% 8.75% 0.8% 7% 6% 0.6% 5% 4% 0.4% 3% 0.2% 2% 1% 0.0% 0% 0% See reconciliation of non-gaap measures in appendix. 4

5 Fourth Quarter Highlights Reported EPS of $0.34 and record core EPS of $0.41 up 41% y/y Generated $487 million of new loans, and grew total loan portfolio 17% annualized q/q and 13% y/y Grew total deposits by $295 mm, up 12% y/y Drove core noninterest expense down 15% y/y and core efficiency ratio to 59% Achieved core ROA target of 1.00% Repurchased 1.2 million shares Announced acquisition of CommunityOne See reconciliation of non-gaap measures in appendix. 5

6 Fourth Quarter Financial Summary ($ mm's except per share data, growth rates, and metrics) % change 4Q15 3Q15 4Q14 Net interest income % 1.2% Provision (reversal) % -271% Non-interest income % 0% Non-interest expense % -6% Pretax income % 10% Net income % -100% 9% Per share $0.34 3% 17% Core adjustments 3.3 NM NM Core Net Income % 31% Per share $ % 41% Key Metrics 4Q15 3Q15 4Q14 Net interest margin 3.70% 3.82% 4.05% Core fee ratio 14.5% 15.7% 14.1% Core efficiency ratio 58.9% 66.0% 70.5% Core ROA 1.00% 0.87% 0.83% Core ROTCE 8.7% 7.1% 6.2% Non-core adjustm ents detail $ 000s Cancellation of debit card processing contract 4,215 Conversion, merger, and restructuring 738 Securities gains (54) Total pre-tax 4,899 Tax effect of adjustments (1,625) Total after-tax 3,274 Net interest income increased by $0.4 million sequentially, with loan growth offsetting 12 bps in NIM compression Provision includes $2.3 mm for new loans and $1.2 mm impairment reversal for legacy portfolio Noninterest expense includes non-core charges of $5.0 mm pre-tax Non-interest income includes $1.5 mm in FDIC expense, of which $1 mm reflects recoveries due to the FDIC associated with the legacy portfolio impairment reversal See reconciliation of non-gaap measures in appendix. 6

7 New ROA Target for 2017 Core Return on Average Assets 1.00% 1.10% NIM compression from purchase accounting 1.10% Planning for reduced recoveries Sustain high quality loan and deposit growth Balance sheet optimization Further cost savings at CommunityOne and Capital Bank Committed to double-digit ROTCE 4Q15 Provision PAA run-off Loan and Deposit Growth Balance Sheet Optimization Cost Savings Acquisition of CommunityOne 2017 Target See reconciliation of non-gaap measures in appendix. 7

8 Generated $487 mm of New Loans New Loans by Product New Loans by Geography $ mm s $ mm s $457 $489 $490 $487 $457 $489 $490 $ $ $ Q14 1Q15 2Q15 3Q15 4Q15 Commercial CRE Consumer 4Q14 1Q15 2Q15 3Q15 4Q15 Florida Carolinas Tennessee Includes loan purchases of $43 mm, $14 mm, and $33 mm in 4Q15, 3Q15, and 2Q15, respectively 8

9 Total Deposits Up 12% Y/Y Deposit Balances Cost of Deposits $ mm s % of Total 5,255 5,364 5,492 5,566 5, % 0.38% 0.39% 0.40% 0.40% 1,419 1,428 1,522 1,773 1,747 30% 0.34% 0.34% 0.36% 0.39% 0.40% 1,398 1,416 1,471 1,442 1,609 27% 1,384 1,405 1,367 1,252 1,383 24% 0.15% 0.15% 0.15% 0.15% 0.15% 1,054 1,115 1,132 1,099 1,121 19% 4Q14 1Q15 2Q15 3Q15 4Q15 Noninterest demand NOW Savings & Money Market Time Deposits 4Q14 1Q15 2Q15 3Q15 4Q15 Total Core Contractual 9

10 NIM Compression In Line with Forecast Net Interest Margin (NIM) 4.05% 3.96% 3.94% 3.38% 3.26% 3.25% 3.82% 3.70% 3.19% 3.21% NIM declined 12 bps primarily due to reduced income from purchase accounting Contractual NIM excluding purchase accounting stable sequentially and down only 17 bps year-over-year 4Q14 1Q15 2Q15 3Q15 4Q15 GAAP NIM Contractual NIM See reconciliation of non-gaap measures in appendix. 10

11 Total Non-interest Income Flat y/y Non-interest Income Before FDIC Expense Non-interest Income Detail $ mm s $ mm s Q14 3Q15 4Q15 Services charges on deposits Debit card income Fees on mortgage loans sold Investment advisory and trust fees Other Non-interest Income ex FDIC expense FDIC indemnification asset expense (3.4) (1.4) (1.5) 4Q14 1Q15 2Q15 3Q15 4Q15 Non-interest Income FDIC indemnification asset expense Total Non-interest Income FDIC indemnification asset expenses includes $1 mm of recoveries due to legacy asset impairment reversal See reconciliation of non-gaap measures in appendix. 11

12 Core Noninterest Expense Down 15% Y/Y Core Efficiency Ratio Non-interest Expense $ mm s 80% 75% % 65% 60% Target 60% 55% 58.9% % 45% 40% 4Q14 1Q15 2Q15 3Q15 4Q15 Non-core adjustments REO expense Core non-interest expense, before REO See reconciliation of non-gaap measures in appendix. 12

13 Liquidity and Capital Ratios Remain Strong Tier 1 Leverage Ratio % 14.4% 14.7% 13.6% The company repurchased $1.2mm shares of stock during 4Q, returning $41 mm to investors including dividends 12.7% Cumulative 22% of shares retired since going public 4Q14 1Q15 2Q15 3Q15 4Q15 Liquidity Modified duration of investments was 4.6 years at December 31, 2015, down from 4.7 years at September 30, 2015 Corporate Bonds 6% Agency CMO 9% Trust Preferred 2% SBA / Other 2% Muni 1% Cash / Equivalents 11% Agency CMBS 24% Agency MBS 45% (1) 4Q15 capital ratio is preliminary. 13

14 New Loan Portfolio Performing Strongly Past Dues & Nonaccruals New Loan Portfolio Credit Metrics 0.5% 0.4% 4Q14 3Q15 4Q15 Criticized 0.32% 0.61% 0.51% 0.3% Classified Performing 0.44% 0.28% 0.31% 0.2% 0.1% 0.16% 0.11% 0.11% 0.22% 0.14% 0.19% 0.17% 0.11% 0.11% 0.11% Classified Nonperforming 0.16% 0.17% 0.11% Total Criticized/Classified 0.92% 1.06% 0.93% NCOs, Annualized 0.18% 0.15% 0.22% 0.0% 4Q14 1Q15 2Q15 3Q15 4Q15 Past Due Non-Accruals 14

15 Special Assets Down 72% Since 2012 Nonperforming Loans / Total Loans Special Assets $ mm s 7.7% 5.8% % 2.6% 1.5% 1.2% Q15 4Q Q15 4Q15 Loans REO Legacy Credit Expenses Down 75% y/y $ mm s 4Q14 3Q15 4Q15 Provision (reversal) on legacy loans (1.4) 0.5 (1.2) FDIC indemnification asset expense OREO valuation expense (Gains) losses on sales of OREO (0.4) (0.4) (0.8) Foreclosed asset related expense Loan workout expense Salaries and employee benefits Total legacy credit expense

16 2016 Outlook Loan Growth Low single-digit in 1H, picking up to 10% rate in 2H NIM - Continued purchase accounting run-off - Higher deposit costs + Balance sheet optimization + Fed rate hike(s) Noninterest Income 1Q deposit and mortgage fees seasonally low Noninterest Expense Higher in 1Q on accruals Cost savings to follow CommunityOne closing/integration Core ROAA % by year-end 1Q seasonally lower See reconciliation of non-gaap measures in appendix. 16

17 Capital Bank Investment Highlights Experienced management team with institutional track record Positioned in Southeastern growth markets Disciplined and sustainable growth story Focused on deploying capital and improving profitability Attractive valuation 17

18 Appendix 18

19 Reconciliation of Core Noninterest Income / Expense $ 000's 4Q15 3Q15 2Q15 1Q15 4Q14 Net interest income $62,078 $61,637 $60,685 $59,729 $61,351 Reported non-interest income 10,597 11,418 10,363 9,920 10,594 Less: Securities gains (losses), net 54 (43) (57) Core non-interest income $10,543 $11,461 $10,420 $9,830 $10,081 Reported non-interest expense $47,756 $48,346 $49,502 $52,647 $50,932 Less: Stock-based compensation expense Contingent value right expense Severance expense Restructuring expense ,341 Loss on extinguishment of debt 1,438 Conversion costs and merger 33 Contract termination 4,215 Conversion and severance expenses (conversion and merger expenses and salaries and employee benefits) 704 Core non-interest expense $42,804 $48,260 $47,868 $49,984 $50,359 Core Fee Ratio* 14.5% 15.7% 14.7% 14.1% 14.1% Efficiency Ratio** 65.7% 66.2% 69.7% 75.6% 70.8% Core Efficiency Ratio*** 58.9% 66.0% 67.3% 71.9% 70.5% * Core Fee Ratio: Core non-interest income / (Net interest income + Core non-interest income) ** Efficiency Ratio: Non-interest expense / (Net interest income + Non-interest income) ***Core Efficiency Ratio: Core non-interest expense / (Net interest income + Core non-interest income) 19

20 Reconciliation of Core Net Income $ 000's Net income Quarter Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended Ended 4Q15 4Q15 3Q15 3Q15 4Q14 4Q14 $15,021 $15,021 $15,321 $15,321 $13,836 $13,836 Adjustments Pre-Tax After-tax Pre-Tax After-tax Pre-Tax After-tax Non-Interest Income Security losses / (gains)* (54) (33) (513) (313) Non-Interest Expense Stock-based compensation expense* Contingent Value Right expense Severance expense * Restructuring expense* Conversion costs and merger tax deductible* Legal merger non deductible Contract termination ,215 2, Tax effect of adjustments* (1,625) NA (50) NA 107 NA Core Net Income 18,295 18,295 15,400 15,400 14,003 14,003 Average Assets $7,332,516 $7,087,882 $6,749,124 Tangible Common Equity $836,643 $872,075 $910,155 ** ROA 0.82% 0.86% 0.82% *** Core ROA 1.00% 0.87% 0.83% **** Core ROTCE 8.7% 7.1% 6.2% * Tax effected at an income tax rate of 37.0% ** ROA: Annualized net income / average assets 20

21 Tangible Book Value (In thousands, except per share data) December 31, 2015 Total common shareholders' equity $986,265 Intangibles, net of taxes 143,863 Tangible book value* $842,402 Common shares outstanding 43,143 Tangible book value per share $19.53 * Tangible book value is equal to book value less goodwill and core deposit intangibles, net of related deferred tax liabilities. 21

22 Contractual Net Interest Margin $ 000s Average Earning Assets Net Interest Income Net Interest Margin December 31, 2015 Reported 6,698,719 62, % Purchase accounting impact (50,768) 8, % Contractual Net Interest Margin (1) 3.21% September 30, 2015 Reported 6,442,167 69, % Purchase accounting impact (55,281) 10, % Contractual Net Interest Margin (1) 3.19% June 30, 2015 Reported 6,221,394 67, % Purchase accounting impact (63,174) 10, % Contractual Net Interest Margin (1) 3.25% March 31, 2015 Reported 6,168,668 66, % Purchase accounting impact (73,831) 10, % Contractual Net Interest Margin (1) 3.26% December 31, 2014 Reported 6,045,748 61, % Purchase accounting impact (79,632) 10, % Contractual Net Interest Margin (1) 3.38% (1) Excludes purchase accounting adjustments 22